India’s economic growth forecast for the financial year 2024-25 has been revised downward by Fitch Ratings, now standing at 6.4%, a drop from its earlier estimate of 7.0%. The downgrade follows the Reserve Bank of India’s (RBI) recent decision to cut its own growth projection for the same period to 6.6%, down from 7.2%.
“Fitch forecasts India’s GDP to expand by 6.4% in the financial year ending March 2025 (FY25) and 6.5% in FY26, slowing from the 8.2% pace in FY24. However, India’s economic growth remains strong relative to that of global peers and supports our asset performance forecast.” the rating agency said.
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The country’s GDP growth for the second quarter of FY25 fell to 5.4%, its slowest pace in seven quarters. This slowdown has been attributed to weakened urban middle-class consumption, traditionally a key driver of India’s economic growth. In response, the State Bank of India (SBI) has revised its growth forecast for FY25 to 6.3%, below the RBI’s projection.
Global financial institutions, including Goldman Sachs and Barclays, have also lowered their growth estimates. Goldman Sachs adjusted its forecast for the fiscal year ending March 2025 to 6%, down from 6.4%.
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This dip in growth presents challenges for the government, particularly for Prime Minister Narendra Modi’s administration. Job creation, a central theme of the government’s economic agenda, faces hurdles as weak growth impacts both urban and rural economies.
However, Fitch Ratings highlighted India’s relative strength compared to other global economies, stating, “The Indian economy recovered strongly from the Covid-19 pandemic shock. Although indicators point to a more mixed picture in recent months, we do not think that the softness will translate into a prolonged slump in economic activity.”
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Fitch remains optimistic about India’s economic resilience, citing domestic demand as a key driver, even amid global trade uncertainties. The agency expects continuity in policy initiatives such as infrastructure development, digitalisation, and business reforms to support growth. Public infrastructure investments and improved corporate and bank balance sheets are also expected to contribute to capital spending and economic activity.
India’s GDP grew by 8.2% in FY24, maintaining its position as the fastest-growing major economy. The country recorded growth rates of 7.2% in FY23 and 8.7% in FY22. However, recent quarters have seen a slowdown. GDP expanded by 6.7% in the April-June quarter of FY25, followed by the lower-than-expected 5.4% in the July-September quarter.
The Economic Survey tabled earlier this year had conservatively projected GDP growth between 6.5% and 7% for FY25, acknowledging market expectations for higher growth. Real GDP growth, which adjusts for inflation, remains central to India’s economic performance narrative.
